David Pakman, a prominent figure at CoinFund, recently articulated a critique that cuts to the heart of Web3's ongoing structural challenges: the industry has yet to meaningfully solve its fundamental tokenomics puzzle. During his appearance on The Starting Block, Pakman outlined the persistent misalignment between token design theory and practical execution, a gap that continues to plague projects seeking sustainable economic models.
The core issue Pakman highlighted centers on how projects incentivize contributions and compensate participants. Rather than forcing contributors to hold volatile native tokens as their primary compensation mechanism—a practice that conflates employment with speculation—he proposed a more pragmatic alternative: compensating builders and team members in stablecoins. This seemingly straightforward suggestion reflects a deeper recognition that tokenomics design in most projects conflates two distinct functions: governance rights and payment settlement. By separating these concerns, projects could insulate contributor income from token price volatility while preserving token utility for other purposes like governance or protocol participation.
This tension illustrates a design pattern that has haunted blockchain projects since the early days of Bitcoin. Projects often launch tokens with multiple intended functions—value storage, governance, transaction fees, incentive distribution—without acknowledging the economic contradictions embedded in these overlapping roles. When a project pays developers in its native token while simultaneously expecting that token to serve as a stable store of value or governance mechanism, it creates perverse incentives. Developers become involuntary speculators, leading to sell pressure during market downturns precisely when projects need stability. Stablecoin compensation separates these concerns logically: contributors receive predictable purchasing power, while the project's native token can be designed for its actual purpose rather than burdened with impossible dual mandates.
The broader implication of Pakman's critique is that Web3 projects may need to fundamentally rethink how they approach token distribution and economic design. Rather than treating tokenomics as a mechanism to bootstrap liquidity or fund development through speculative token sales, successful projects will likely treat token utility and contributor compensation as distinct problems requiring separate solutions. As the market matures and regulatory pressure increases, expect to see more sophisticated projects adopting hybrid models where stablecoins handle operational payroll while native tokens focus on protocol governance and long-term alignment incentives.